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Forexpros – The euro moved marginally higher against the U.S. dollar in Asian trade Friday, following remarks by European and U.S. central bank heads warning of further fragility in the global economy.
EUR/USD hit 1.3916 in early Asian trade, the pair’s highest since Wednesday; the pair subsequently consolidated at 1.3908 rising 0.22%.
The pair was likely to find support at 1.3838, the low of July 12, and resistance at 1.4248, Wednesday’s high.
Earlier Thursday, European Central Bank President Jean-Claude Trichet told reporters in Frankfurt that “looking ahead, we expect the euro area to grow moderately, subject to particularly high uncertainty and intensified downside risks.”
Trichet’s remarks were a possible indication that the ECB would not likely be introducing any additional interest rate hikes after two raises in April and July that set the lending rate at 1.5%.
Some economists had forecast an impending rate cut from the European Central Bank in light of tepid growth of only 0.2% in euro-zone GDP for the second quartler.
European stocks finished Thursday’s session higher, with France’s CAC 40 rising 0.41% to 3,085.83, Britain’s FTSE 100 climbed 0.41% to 5,340.38, and Germany’s DAX rose fractionally by 0.05% to end the day at 5,408.46.
On the other side of the Atlantic, Federal Reserve Bank Chairman Ben Bernanke said the U.S. central bank would be discussing options available to support the economy, but fell short of spelling out specific proposals for growth.
“Importantly, we see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy,” Bernanke said to an economic group in Minneapolis.
Analysts had been looking at the Fed’ outlook on inflation as key to whether the U.S. central bank would be introducing a new round of quantitative easing.
Following Bernanke’s comments, Wall Street shares sagged to end the session lower, with the Dow Jones Industrial Average down 1.04% to 11,295.81, the Nasdaq Composite Index fell 0.78% to 2,529.14 and the S&P 500 declined 1.06% to close the day at 1,185.90.
Meanwhile, the euro was higher against the both British pound and the Japanese yen, with EUR/GBP up by 0.07% to hit 0.8703, and EUR/JPY rising 0.20% to hit 107.79.
Market eyes turned attention to Thursday evening’s scheduled speech by U.S. President Barack Obama, where he was expected to propose a nearly USD300 package to boost the country’s economy.
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